Rather than competing with the more expensive Apple iPad range, it is expected that Google will target the cheap Kindle Fire, which has proved hugely popular since its release by Amazon in the US last autumn.

It was initially expected that Google would challenge the premium end of the market with a Nexus-branded tablet featuring high-end specs and a price tag to compete with the iPad.

But Digitimes's sources say the Google tablet will feature a seven-inch screen, smaller than the iPad, and come with the Android 4.0 Ice Cream Sandwich operating system.

The blog further adds that the device will be priced at $199 (£128), the same as the Amazon Kindle Fire, which runs Google's Android operating system. The Google tablet is likely to arrive in either March or April this year, claims the site.

Just like Amazon, Google is expected to adopt the strategy of taking only a small upfront profit on the tablet, if any, but then monetising the product through its content and entertainment services.

The Google tablet is therefore likely to come bundled with apps for Google Music and Google Books, as well as film and video streaming via YouTube.